Wednesday, 19 October 2016.

How Quickly Will End-Users Join the Vision for A Flexible Power System?

Verdantix attended the EnerNOC UK Demand Side Response Breakfast Briefing on 18 October, 2016, which featured speakers from the EnerNOC leadership team and the UK National Grid. A major theme of the event was the need for greater flexibility in the UK power system - driven by changes at the macro-level, such as the increasing penetration of renewables and the closure of coal-fired power plants which are putting pressure on capacity margins.

Demand-side flexibility is the fundamental adjustment factor as the energy landscape gradually transforms. It is a theme seen in many supplier propositions being launched in the UK energy management market, such as those based on demand response or energy storage. Start-ups such as Tempus Energy and Limejump are establishing innovative energy supply offerings which help customers benefit from being flexible in their consumption of energy. Power utilities are testing ways to help the power grid accept higher levels of renewable generation through pilot projects, such as SSE’s smart grid project in the Shetland Islands. So there is clearly a lot of investment taking place on the supply side, but to what extent have corporates in the UK been moving towards this vision of a flexible power system?

In our recent interviews with 25 UK-based energy managers at large firms, the majority of them told us that making the most of flexibility in energy usage is a knowledge gap for their organization. Whilst the energy managers rated their firms highly at developing broad strategies for energy management, they are not confident in their ability to be flexible in purchasing electricity from the grid, which could help their firm to reduce demand charges. We heard that our interview panel is still testing the value of demand response, with 24% of respondents using demand response only at a single site.

So in a market where suppliers are investing ahead of customers, the big challenge is how to move the dial on the customer side. Alongside market education and developing real proof points, suppliers should consider pitching demand side flexibility as part of a broader facilities optimization programme. For example, the payments for demand response could be used to maintain operations at facilities or finance projects aimed at improving operational efficiency. Energy storage could help support strategies for the continuity of supply. This could help raise the profile of offerings like demand response, in a world where many firms do not see energy management as high on the corporate agenda.

So in a market where suppliers are investing ahead of customers, the big challenge is how to move the dial on the customer side. Alongside market education and developing real proof points, suppliers should consider pitching demand side flexibility as part of a broader facilities optimization programme. For example, the payments for demand response could be used to maintain operations at facilities or finance projects aimed at improving operational efficiency. Energy storage could help support strategies for the continuity of supply. This could help raise the profile of offerings like demand response, in a world where many firms do not see energy management as high on the corporate agenda.

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